Solved case study on toyota-the rise of a global corporation

1. PRESENTEDBY,
JACKSONJOHN
REENUMATHEW
RUBYPRASAD
TANIAANTONY
SHIJINSAMVARGHESE
S3 MBA
MAcFASTCollegethiruvalla

2.  Toyota is becoming more of a global
corporation and would be largest
automobile company in the world. It has
established in 1937 from a loom
manufacturing company by a person
named Sakichi.
 It has made $ 11 million profit in 2006. it
has most efficient and effective
production system in the world.

3. 1. Founder(s) : Kiichiro Toyota
2. Founded : 1937
3. Lean production system
4. Mass production system
5. Reducing set up time
6. Organization of the workplace
7. Improving quality
8. Developing Kanban system
9. Organizing supplier
10. Expanding globally
11. Transplant operation
12. Product strategy

4.  Toyota motor company is the world most leading
company. Sakichi was the inventor of the company. Its
production system is lean basis.
 The primary stage of Toyota faced the capital shortage.
The massive production system was produced limited
product line in massive quantities to gain maximum
companies goal.
 Though the lean production system; this company succeed
in reducing the time in production. In the work place, the
company was to form group and equal family.
 The ultimate aim was to bring customers into the Toyota
design and production process. On the basis of customer
involvement and continuous development Toyota is able
to capture the most of the market in the whole world.

5. 1. Compare and contrast Toyota revolutionary lean
production system traditional mass production
system for making automobiles. How is Toyota
system superior?
Ans:
a) The basic philosophy of mass production system
is to produce limited product line massive quantities. This
economic scale can be achieved through mass production
by spreading fixed cost over a large production run as
possible.
b) It takes the advantage of maximum economic of scale
c) In this system the setting up time of much production
process could waste huge time.
d) In this long run production process, assembly workers of
Toyota should perform a single task lonely.
e) The worker become familiar as it is associated with variety
of task assigned to them.

6. f) Large number of specialties required to inspect the action
of workers.
Lean production system of Toyota:
 Lean production system is the combination of those
operations system that maximize value added by each of a
company’s activities by paring necessary resources and
delay from them- Small lot size is maintained in the lean
production system as to avoid risk of fall market demand
against huge investment.
 In this system, with using simple mechanized adjustment
production workers are directed to perform several tasks.
 The task or step of process Toyota’s lean system allocated
into the trained team of workers.

7. 2. Compare and contrast the arm’s length relationships
that toyota used to manage suppliers in Japan with the
approach traditionally taken by US automobile
manufacturers. What were the benefits of the Toyota
system? Can you see any drawbacks?
Ans:
 Traditional approach of vertical integration made the
American manufacturers efficient by reducing their
dependence on other firms for materials and components.
On the other hand, using arm’s length relationships Toyota
wanted to avoid capital expenditure required to expand the
capacity to promote vertical integration.
 America’s GM and FORD made sequentially 68% & 50% of
their components in house basing on the assumption of limiting
their vulnerability to opportunistic overchanging,

8. On the contrary, Toyota promoted close ties with suppliers holding
a view that the reduction of risk maintaining low factory capacity
can be beneficial in case of factory sales slumped.
 Automobiles of USA were required high qualified and high waged
employees to built the major component . In contrast, Arms
length relationships with suppliers paved a way for Toyota to take
the advantage of the lower wage scales in smaller firms.
The benefits of Toyota system,
 First tier suppliers and second tier suppliers performed the
almost full design of the intended model.
 As suppliers were included in the project design and engineering,
they supplied accurate delivery on the right time.
 83% of the value had come from outside suppliers for Toyota in
1980s.
 Long term improvement in productivity and quality comparing to
others.

9. I can find out some drawbacks of arms length,
 Demanding share of automobile by suppliers
 Lack of independence
 Pricing while long contract may be expensive in future.
3. What drove the development of TOYOTA’s revolutionary “lean
production system” during the 1950s to 1980s? To what extent
were factors unique to Japan during this time frame
responsible for the development of lean production system?
Ans: The factors that drove the development of Toyota’s
revolutionary lean production system during the 1950s to 1980s
are discussed below:
 Small market of Japan to support massive mass production
 Starvation of capital in that economy
 Increased bargaining power of labor
 Ignored consumer preferences for product diversity

10.  Huge defective component detected in final stage
 Gathering of high waged specialties in each step
 Suppliers delivery of inaccurate & low quality raw
The above factors were highly unique during the time frame to
develop the revolutionary lean system. Some of them are
discussed below,
 Set up time for one component created huge inventory,. So, to
reduce the set up time Toyota introduce and develop lean
production where one worker was assigned to several tasks.
 As sheer monotony of assembly workers leads to poor quality and
huge specialties were needed to inspect, then it developed lean
system. By establishing team work, it had been successful by
cutting 25% of workforce after 1950.
 Another factor of promoting lean system was the errors were
detected in huge amount and it were harder to fix them when
they were detected at final assembly. Kanban system was
successfully applied to remove this problem.

11. 4. Why did Toyota enter into the NUMMI joint venture
with general motors in 1984? What were the benefits of
this venture to Toyota?
Ans: Toyota entered into the US market into the NUMMI as joint
venture because,
 America had imposed tax and tariff in Japanese company
 Toyota also wanted to set up a plant in the US so it has
intentionally imposed import quota to export cars in America to
set up a plant in USA. So I entered into the NUMMI joint venture
with General motors in 1984.
There are some of this benefits of this venture to Toyota, they are
as follows;
 To get permission to work America as a 50/50 joint venture with
GM
 To reduce transportation cost to export car from Japan to
America
 To supply the product at low cost

12.  Opportunity to use American labors and suppliers
 To gather experience in American union
 To use Japanese expertise in America
 To help establishing new product in America
5. What drove Toyota’s subsequent expansion of
production facilities in United states and Europe?
Ans: There are some causes which drove Toyota’s subsequent
expansion of production facilities in the United States and Europe.
They are as follows,
 In 1960s Japanese were not competitive in low scale production in
overseas market.
 Toyota products were high priced for 40% tax
 Subsidiary were flopped in the US and American market.
So it as done the following things to expand in the American and
the European market..

13. I. In 1984, has set up a joint venture with General Motors
based in California named NUMMI
II. In 1985 announced to set up a individual plant
Georgetown, Kentakey and established in 1988 and
produced 220000 cars which were more than its target
III. Second plant set up in Georgetown in 1990
IV. Expand its plant different plants in America invested $16.8
billion and produced 105 million vehicles a years
Toyota has done the job successfully to expand their market in
the European market.
6. In general, Toyota’s foreign plants achieved
productivity level similar to those in Japan. What
conclusion can you draw from this about the role of
national culture in shaping the Toyota’s production
system?

14. a) As a small country Japanese always want to use the
existing resources like Toyota
b) National culture of Japanese teaches them to not to
wasting time staying idle. As they are inherited this kind of
quality, it is natural to Toyota to introduce lean system to
reduce set up in different steps
c) Japanese are very industrious and psychologically strong to
take risk. For this attitude or culture Toyota had
implemented the changing innovation instead of traditional
practice.
d) Culture of Japan advocates the cordial relationship with
outsiders. Toyota maintained close ties with suppliers and
was benefitted too
e) Japanese are very reliable and honest to keep the promise
of others.

15. 7. What evidence is there in the case that Toyota is becoming
more of a global corporation? What are the implication of this
for the long term competitive advantage of the company?
Ans:
Toyota is becoming more of a global corporation and would be
largest automobile company in the world. There is some
symptoms as well historical implementation of various activities.
 Overseas operation has grown from 11 production facilities in 9
countries in 1980 but in 2006 it has 52 production facilities in 26
countries.
 Have a vision to capture 15 percent of the automobile market
where 11% were 2006 but 14.7% has achieved in 2010 in March.
 Required less assembly time and fewer defects in Toyota cars than
General Motor, Ford, Nissan and less inventory stock time.
 Reduced installation time from 12 second to 3 second and reduced
land loading time in die making set large body panels from 3
months to 107 months.

16.  Toyota used long term supply relationship with
suppliers as well as customers.
From the above discussion we can come to a strong
discussion that Toyota would be world largest as
well as most efficient automobile company.